India to cut tariffs on EU cars fr 110% to 40% – report
India, the world’s third-largest car market, is planning to cut tariffs on cars imported from the European Union (EU) to 40% from as high as 110%, and this could be further lowered to 10% over time, Reuters reports.
India and the EU are expected to announce today the conclusion of protracted negotiations for the free trade pact, after which the two sides will finalise the details and ratify what is being called “the mother of all deals”. This pact could expand bilateral trade and help Indian exports of goods such as textiles and jewellery, which have been hit by 50% US tariffs since late August.
Sources have told the news agency that following trade talks with the 27-nation bloc, the Indian government has agreed to immediately reduce the tax on about 200,000 combustion-engined (ICE) cars a year with an import price over 15k euros (RM71k). However, this could be subject to last-minute changes. New Delhi currently levies high tariffs of 70% and 110% on imported cars.
EVs, however, will be excluded from import duty reductions for the first five years to protect investments by domestic players like Mahindra & Mahindra and Tata Motors – after which, they will follow similar duty cuts, says the report.
If this turns out to be true, it bodes well for the likes of Volkswagen, Renault, Stellantis, Mercedes-Benz and BMW, all of which make cars in India (CKD) but have struggled to grow beyond a point partly because of high tariffs. European carmakers currently command less than 4% of the country’s 4.4-million-unit-a-year market (expected to swell to six million by 2030), which is dominated by Maruti Suzuki as well as Mahindra and Tata that together hold two-thirds.
One of the sources told Reuters that lower taxes would allow carmakers to test the market with a broader portfolio before committing to more CKD operations, besides being able to price imported vehicles lower.
